Indiana Administrative Code
Title 45 - DEPARTMENT OF STATE REVENUE
Article 17 - TAXATION OF FINANCIAL INSTITUTIONS
Rule 3 - Computation of Tax
Section 3-10 - Attributing receipts for nonresident taxpayers and nonresident members of a unitary group
Universal Citation: 45 IN Admin Code 3-10
Current through September 18, 2024
Authority: IC 6-5.5-9-1
Affected: IC 6-5.5-1-10; IC 6-5.5-4
Sec. 10.
(a) As used in this article, the following definitions apply:
(1) "Receipts" includes all gross income as
defined in Section 61 of the Internal Revenue Code. However, upon the
disposition of assets such as securities and money market transactions, when
derived from transactions and activities in the regular course of the
taxpayer's trade or business, receipts are limited to the gain (as defined in
Section 1001 of the Internal Revenue Code) that is recognized upon the
disposition.
(2) "Money market
instruments" means federal funds sold and securities purchased under agreements
to resell, commercial paper, banker's acceptances, and purchased certificates
of deposit and similar instruments.
(3) "Securities" means United States Treasury
securities, obligations of United States government agencies and corporations,
obligations of state and political subdivisions, corporate stock and other
securities, participation in securities backed by mortgages held by United
States or state government agencies, loans backed securities and similar
investments.
(b) Attribution of receipts shall be as follows:
(1) Receipts from the lease or rental of real
or tangible personal property must be attributed to Indiana if the property is
located in Indiana.
(2) Receipts
from the sale of an asset, tangible or intangible, must be apportioned in the
manner that the income from the asset would be apportioned under this
article.
(3) Receipts from the
performance of fiduciary and other services must be attributed to the state in
which the benefits of the services are consumed. If the benefits are consumed
in more than one (1) state, the receipts from those benefits must be
apportioned to Indiana on a pro rata basis according to the portion of the
benefits consumed in Indiana.
(4)
Receipts from the issuance of traveler's checks, money orders, or United States
savings bonds must be attributed to the state in which the traveler's checks,
money orders, or bonds are purchased.
(5) Receipts from investments of a financial
institution in securities of this state and its political subdivisions,
agencies, and instrumentalities must be attributed to Indiana. "Political
subdivision" means a county, township, city, town, separate municipal
corporation, special taxing district, or school corporation. "State agency"
means a board, commission, department, division, bureau, committee, authority,
military body, college, university, or other instrumentality of this state, but
does not include a political subdivision or an instrumentality of a political
subdivision.
(6) Interest income
and other receipts from assets in the nature of loans or installment sales
contracts that are primarily secured by or deal with real or tangible personal
property must be attributed to Indiana if the security or sale property is
located in Indiana.
(7) Interest
income and other receipts from consumer loans not secured by real or tangible
personal property must be attributed to Indiana if the loan is made to a
resident of Indiana.
(8) Interest
income and other receipts from commercial loans and installment obligations not
secured by real or tangible personal property must be attributed to Indiana if
the proceeds of the loan are to be applied in Indiana. If it cannot be
determined where the funds are to be applied, the income and receipts are
attributed to the state in which the business applied for the loan. As used in
this section, "applied for" means initial inquiry (including customer
assistance in preparing the loan application) or submission of a completed loan
application, whichever occurs first.
(9) Interest income, merchant discount, and
other receipts including service charges from financial institution credit card
and travel and entertainment credit card receivables and credit cardholders'
fees must be attributed to the state to which the card charges and fees are
regularly billed.
(10) Interest
income and other receipts from a participating financial institution's portion
of participation loans must be attributed under this article. A participation
loan is a loan in which more than one (1) lender is a creditor to a common
borrower.
(11) Fee income and other
receipts from letters of credit, acceptance of drafts, and other devices for
assuring or guaranteeing loans of credit must be apportioned in the same manner
as interest income and other receipts from commercial loans are
apportioned.
(12) Any other
receipts of gross income not specfically attributable to Indiana or to another
taxing jurisdiction applying this subsection, shall be attributed to Indiana in
the same proportion that aggregate receipts are attributed to Indiana under
subdivisions 1 through 11.
(c) If a taxpayer has adjusted gross income from a trade or business subject to apportionment under this section and in addition has income not connected with that trade or business, the unconnected income must be allocated to its commercial domicile and therefore will not be included in either the numerator or denominator for purposes of determining the apportionment percentage. Intangible property is employed in a trade or business if the owner of the property holds it as a means of furthering the trade or business. Income from such intangible property is considered to be connected with the trade or business and is subject to apportionment.
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